The U.S. government is getting into the mining business. Last week the Pentagon announced a $400 million investment into MP Materials. It is a U.S.-based company that extracts and processes rare earth elements. That includes a group of 17 metals used in technology from cars to airplanes to your cell phone.

For years, China has processed some 90% of the world’s rare earths. That is making U.S. policy makers nervous.

The U.S. hasn’t always relied on China for these materials, said Saleem Ali, a geographer at the University of Delaware.

“There was a time in the 1970s and ‘80s when the United States was the largest producer of rare earth minerals,” Ali said. “And most of those rare earths came from the Mountain Pass Mine in California.”

However, over time, China’s rare earth industry put nearly all of that out of business, said Neha Mukherjee of benchmark Mineral Intelligence. 

“The reason why their cost of operation is very low is because this entire thing is funded by the Chinese government and it has been taking control over the supply chain gradually, and it has only been increasing that control,” Mukherjee said.

According to Mukherjee, China isn’t afraid to exercise that control.

“China uses critical minerals as a strategic leverage, and they can turn on the tap whenever they want to and they can turn off the tap whenever they want to,” Mukherjee said.

In April, amid Trump’s trade war, China turned off the tap on some rare earth exports. That put the U.S. auto industry on edge, as well as the Pentagon. Those rare earths go into a special kind of magnet.

“It’s used in fighter jets, it’s used in submarines, it’s used in missiles,” Mukherjee said.

So, the Pentagon chose to invest in producing rare earths here in the U.S. With the deal, MP Materials plans to mine rare earth ore, from that same old Mountain Pass mine in California. It will process that ore and turn it into the magnets. 

“They are in the midst of creating a full supply chain,” said Morgan Bazilian, a professor of public policy at the Colorado School of Mines.

Now, while it’s true the government has provided some support to the industry in the past…

“This is absolutely a step change,” said Bazilian.

Bazilian said the Pentagon has promised to buy rare earth magnets from MP Materials at a higher price than Chinese-made ones currently fetch. That guarantee has helped spur more $1 billion in additional private financing for the project. As part of this deal, the Department of Defense gets something else, too.

“The DoD would become the largest shareholder in the company at about 15%,” said Bazilian.

The company points out: that’s far from full control, and they’re still publicly traded. However, there are some worries about the government taking a big stake in a strategically important firm, said Saleem Ali of the University of Delaware. 

“In essence it’s a form of nationalization of the company,” said Ali.

That’s the kind of thing that’s historically been more common in other countries, said Ali — countries like China.